Schlagwort-Archive: Network

More agile with platforms

It is not sufficient to have a promising business idea. There are many hurdles to overcome before the actual work begins. In the days of Henry Ford it worked out well, as soon as you mastered the entire value chain. Meanwhile, the pendulum is swinging in the opposite direction. Today, the one-hundred percent vertical integration is being replaced by a very low percentage – at the SMART plant in Hambach, France, it amounts to ten percent. Digitization will lead to even flatter vertical integration. These become possible, when the many tasks are spread across many shoulders. Platforms provide such shoulders.

It does not matter, whether we are talking about different platforms or one that contains all the necessary functions. With the following offers tomorrow’s entrepreneurs can focus on their actual business model.

  • Technology
    The fourth industrial revolution, Industry 4.0, is driven by the opportunities of network-based ICT – cyber-physical systems, big data, cloud services, 3D manufacturing, embedded technologies, etc. The use of these offerings cannot be avoided. However, you do not have to take care of all aspects anymore. These tasks have been taken over by platforms that provide these services in a user-friendly way.
  • Operating system
    The term was created in the field of IT. The operating system combines different components into a functioning whole. Under the slogan XaaS (Everything as a Service), today platforms are being provided in an application-oriented way – from infrastructure, to production facilities, to special applications that are used when required and paid only then.
  • Area of ​​Expertise
    In 10 main occupational groups you will find the different professions, each responsible for specific areas. The specialization of the individual areas provides today a vast amount of practical experiences that can be used without the need that one has to familiarize oneself with the respective area. The fourth revolution will lead to more and more platforms, where experts offer their deliverables as a service.
  • Network
    The current networks are websites where producers and consumers meet on a platform provided by a broker in order to offer a certain service – UBER, AIRBnB, Paypal, Ebay etc. In the future, exclusive biztopes will emerge, where selected participants support each other in their business. The Henry Ford of today shares his means of production on a platform with his competitors and stands out in speed, good ideas and versatility.
  • Market
    The place to trade has always been determined by the goods and services that have been exchanged, as well as by geographical features. An overlap of markets rarely took place. Today’s markets are just a click away from every user. Therefore on the one hand one is quickly at the point of action, but on the other hand one is also exposed to all offers. The benefits of the classic marketplace, with its reference points and regulations, are already being exploited by platforms where sellers and buyers meet at auctions – eg. Covisint, SupplyOn.
  • Niche
    The little sister of a market is the niche that forms in the corners, where big markets do not expect much revenue. Through the Internet, this niche is as reachable as the big market. Depending on the success of the niche, it can quickly develop into a market and cover with its platform more and more areas.
  • Business model
    In a modular world, the actual business models use pods (i.e. small, autonomous units that develop value-add) that are needs-oriented created and eventually resolved when they fulfilled their purpose. The required resources are drawn from the various platforms (see above) on an expenditures basis (pay-per-use). The costs are created by integrating the technology, the operating system, the area of expertise, the network, the market and one’s own niche. If the results are correct, then over time the users will optimize the interaction with the platforms.

Bottom line: The start of a new business model no longer requires the immense preparation by building the necessary technology, a coherent operating system, the experience of a specialist area, the lengthy development of a network, the development of a market or its own niche. Platforms allow start-ups or new businesses to focus on designing their core competencies. Platforms make businesses more agile.

ProCons of networks

Increasing volatility, uncertainty, complexity and ambiguity (VUCA) can no longer be mastered with the rigid structures of the past. Collaboration takes place across borders, wherever you look. The related structures are constantly changing and subsist on self-organizing actors who build, use and eventually resolve the necessary relationships. The result is a more or less dense network. Aside from today’s needs, where everything is just one click away, there are some arguments in favor of and against the use of networks.

The following ProCons affect not only networks but all types of communities.

Pros

The benefits cover more than just the economic interests of the companies.

  • Competence advantages
    The network draws its strength from the purposeful connection of resources and capabilities. The participants‘ intrinsic motivation provides the network with a long-term advantage ahead of other forms, which on the one hand require a lot of setup time and on the other hand never have comparable access to this amount of competencies.
  • Information advantages
    The actors provide a lot of information. This includes experience and knowledge about different markets, customers, products, technologies and, above all, business processes. By sharing this information (push vs. pull), they reach all network participants at a relatively high speed.
  • Resource advantages
    The actors already provide a variety of resources – material and immaterial goods and especially people. Contrary to other forms of organization, the network offers an adjustable openness that makes it possible to expand resources faster. Just the use of these resources of the actors provide means that otherwise would have to be procured with much effort. In addition, this tool is usually better suited that is brought by the craftsman.
  • Social advantages
    Getting to know like-minded people is a huge advantage for the actors. The sense of community offers an environment in which you can expect more pleasant working conditions and a trustworthy cooperation due to the same interests.
  • Economic advantages
    Looking at the entire network, there are many savings for the company. Cost advantages arise when the actors already bring additionally to their commitment many resources that do not need to be purchased. The combined competence accelerates the business and reduces the risks. Practicing self-organization in a network avoids delays caused by a hierarchical structure with its long decision-making and communication paths.

Cons

Against networks speak especially apparent extra efforts, unpredictability and the difficult control.

  • Time
    Even with all the advantages, networking requires active involvement of its members. The open procedures and the lack of centralized control require other efforts of the participants, which are perceived at first glance as additional expenses. However, much higher overall savings can be made for the company.
  • Redundancies
    Even with a lot of engagement in disseminating information, there can be more double work in the self-organized network than in a tayloristic organization. The lack of control can lead to a competition for the best idea that would be wasteful.
  • Increased communication effort
    The multiplicity of actors increases the coordination effort, which can even not be avoided with agile approaches. New insights and experiences simply have to be shared, absorbed and processed. This effort is the price for a lot of advantages.
  • Cooperation issues
    Of course, because of the variety of characters, there will not only be sympathy, but also antipathies that can burden collaboration and trust and eventually lead to an increased need for mediation. This makes team building an important exercise.
  • Lack of control
    A strong driver for the formation of a network is the intrinsic appeal for each participant. Leadership could quickly disturb. At the same time, a network also needs a direction. Without centralized control, the network might take longer to reach an agreement.
  • Information loss
    The open structure of a network and the frequent participation of individual members in different networks automatically lead to the leakage of information. Lack of secrecy could endanger the network.

Bottom line: Although many aspects speak against creation and participation in a network, you have to face the fact that a VUCA world creates new conditions that function in a way that cannot be covered by traditional approaches. The competence, information, resource social, and economic advantages are arguments for the use of networks. At the same time, appropriate measures have to minimize the risks.

Properties of a network

The boundaries of companies dissolve in favor of cross-border networks. Actors and relationships, interests and data, expectations and information, business models and knowledge find their way on the Internet. Joining an online community can make the difference for individuals and groups. Whether private or business – it is helpful to know the new realities, the properties of a network.

The effects of the net can be better exploited, if you know its characteristics.

  • Size
    The number of actors/nodes amount to the size of the network. The more participants, the greater the benefit of the network. Additional offers, which exceed the actual purpose, expand the scope of application. A historical example illustrates the importance of size: the more people with a telephone, the more people can be reached, the more people have a telephone and the more services (e.g. information, routing, wake-up calls, telephone counseling) can be marketed. Based on the Dunbar number, the natural limit of social relationships is 150 persons, between 100 and 250. Based on the average number of Facebook friends per user of over 300 (between 250 and 500) you can presume that in the social networks of the Internet the Dunbar number doubles.
  • Density
    The actors become interconnected with one another to a more or less close meshed network. The number of actual relationships between the actors/nodes together with the possible number of connections determine the density of meshing. If the resulting connectivity is very dense, the network has a great impact on each individual. Loose attachment appears in the lack of social relationships and subsequently with frustration as well as isolation. The density can be represented by the number of relationships in respect to the possible relationships – e.g. a network of 8 people has (8-1) * (8/2) = 28 possible relationships; in this example all people are centrally only linked to one person, but not to each other, resulting in 7 relationships; this corresponds to a density of 0.25.
  • Openness
    The relationships that get out of the network determine the degree of openness. Prerequisite is the definition of the network boundaries. In companies, they are today much more permeable due to partnerships, joint ventures and outsourcing. The project relationships lead to frequent changes of the network members. The openness results from the number of external relationships in respect to the possible relationships. They are double-edged. On the one hand, a network gains new ideas and members through openness. On the other hand, experiences and insights unintentionally flow out of the network, and people get the opportunity to exert undesirable influence through openness.
  • Perseverance
    Networks have a certain life of their own because of the large number of actors. Perseverance describes the degree of stability. It results from the increase of members and relationships, the changing degree of formal structure, and the general direction, i.e. growth, consolidation or shrinkage of the network Too much change endangers the perseverance and results in the formation of new networks or internal group building.
  • Speed
    The time it takes to bring insights to all nodes defines the speed. This information flows through the relationships. With respective channels, actors can communicate in different ways, such as email, intranet, or by exchanging ideas. The distribution can take place by pull or push principle. The pull principle is based on information needs – knowledge is obligation to search; trigger is the target audience; mostly bottom-up. The push principle is aligned to the needs for informing – knowledge is an obligation to deliver; triggers are the information sources; mostly top-down. Built-in feedback, such as receipt confirmation or collection of comments, allow assumptions about the speed.

Bottom line: The network is the most likely organizational format in times of VUCA. The membership benefits are determined primarily by the number of users. Other characteristics are the density, openness, perseverance and the speed of the information flow. Although the network properties allow a better control, it is still necessary to continuously observe and evaluate the network due to the self-organizing members.

Ingredients of a network

With the new millennium, a new sphere of relationships to one another has emerged – the Internet. Thus, the material hurdles for contacts continued to decrease. Companies like Facebook & Co. create the bedrock for networking across national and geographic borders. On Facebook alone, over 2 billion users have registered. The social networks call users differently – friend, follower, contact, subscriber. The relationships are usually made by invitation and confirmation. Due to these new opportunities, it is helpful to realize what the ingredients of a network are.

In addition to the offerings of a network, its complexity results from the set of actors and the number of relationships.

Actor (Node)
The acting entity in a network is the actor, or node. On the one hand, these can be individuals and groups, or even automated actors in the form of IT programs. The effect of a network is created by the diversity of the actors that constitute the network. This system lives on the interests and the resulting solutions, decisions and implementations. In order to be able to participate, the parties involved must perceive their environment, integrate the observations into their thinking models, then exchange and enrich each other as well as act on the world with initiatives. The actors can be reduced to a few basic types.

  • Reactive actors act in a situation instinctively and without thinking.
  • Forward-thinking actors think through a situation and then follow prepared plans and intentions.
  • Business actors mix spontaneous reaction with planned action.
  • Prosaic actors additionally assess the situation and then act on business.
  • Altruistic actors assess social compatibility and behave accordingly.
  • Autonomous actors are software-based solutions that execute simple rules and plans.

When looking at a network, it is essential to have a list of all stakeholders and their expectations.

Relationship (Edge)
The connection between the actors is the relationship, or edge. It is used to exchange among the doers material and immaterial things, such as artefacts, data, information and knowledge, and to create results together. The strength of the relationship stems from mutual commitment, trust, reciprocal benefits, and time spent together. There are four different types of relationships.

  • Supportive relationships exist when the actors are helpful, responsive and benevolent.
  • Opposing relationships become visible when the participants are reluctant, dismissive and disapproving of each other.
  • Indifferent relationships exist when the persons affected are not interested, unemotional and distant.
  • No relationship means that people do not have contact with each other.
  • Ambivalent relationships exist when the actors happen to switch back and forth between the previous ones.

The conscious classification of relationships enables selected control of the network.

Network itself
The sum of actors and relationships create a network or system. It has a purpose, a clear structure and certain procedures. In case of tree, ring or line structures, actors are connected in a row, one behind the other. Only the meshing makes the network – i.e. actors are connected to several actors. If a network exceeds a certain size, subnetworks or completely new networks evolve.

  • The purpose of a network is described by stakeholder expectations, the derived strategy, and the long-term strengths, weaknesses, opportunities, and threats.
  • The composition of the network is determined by the actors and relationships as well as the aspects of the governance, the distribution of power, the leadership and the internal and external image.
  • The procedures of a network are determined by the cooperation, the social interactions among each other, the balanced give and take as well as the effects and their qualities that result.

The cohesion of the network offers all participants a great benefit.

Bottom line: The fabric that will dominate the business world in the future is the network – open, dynamic and complex. The difficulties in a VUCA world are the heavily to understand interactions between the components – the actors, relationships, and the resulting networks. It is no longer enough to build up internal organizational structures and processes. Skills are required to deal with the dynamics of overarching networks – holistic thinking, critical thinking, and change competence. For this purpose it is useful to gain as soon as possible an understanding of the ingredients of a network

The dimensions of the digital transformation

The search for digital transformation affects many areas of the business. In the context of  the delivery of goods and services as well as in the generation of  revenue and income, traditional notions of the business world dissolve – the size no longer determines the range; Knowledge is not only available to the financially strong ones; Collaboration does not  need the common roof of a company. The society and the politics no longer provide the sense of belonging and social security to citizens – opinions are controlled with new resources, the new normal is the loud otherness; ethical principles are reinforced by the own filter bubble. A look at the dimensions of digital transformation shows that we are already in the middle of change.

The following dimensions require rethinking in business as well as in politics – now. Digital transformation will be possible, as soon as obsolete conditions are abandoned – e.g. Preference of long-term frame contracts, high entry barriers for small businesses by purchasing departments, lack of access to financial means and bureaucratic overload through institutional requirements.

  • Scaling for all
    The use of economies of scale was previously reserved for large companies. In order to keep the price for the means of production low, large quantities had to be accepted. Digital components cost almost nothing. This will make even small businesses competitive. Now these new entrepreneurs still have to be freed from the bureaucratic burden of the old economy. Purchasing departments and HR departments need new terms and conditions for these micro-business partners.
  • Limitless cooperation
    The services are complex today, since they are composed of many building blocks. The differences in local or national circumstances that have to be taken into account are made possible by modules and interfaces that fit together because they are standardized. The mandatory cooperation and the distribution of income need new business models.
  • Increasing acceleration
    The virtual proximity of all those involved, who are only one click away, leads to a staggering speed. Established approaches and formal decision-making can no longer compete. This gives unbureaucratic, agile companies a head start. It can only be achieved, if the legal and internal framework conditions are correspondingly debureaucratized.
  • „Soft“ capital
    Since physical assets no longer count in digital markets, „soft“ capital comes to the fore – data, knowledge, software, relationships. The critical key players are the computers, networks and above all the employees, who can be located anywhere in the world. This requires the replacement of a rigid corporate concept with networks that are able to quickly come together and to dissolve again.
  • Homeless values
    The values of a company are situated in the cyber-wonderland. There are no national boundaries or affiliations. Since national laws and regulations lose their effectiveness, we need in the medium term supranational legislatures and tax authorities to take over these tasks. In the meantime, the values are moving back and forth in the twilight zone. Assets are no longer determined by an objective financial value, but by the ability to create something new.
  • Network for everyone
    The minimal effort that is needed to set up a network enables everyone to open their own bubble of information. Over time, there will be powerful creative clouds due to the participants and their networking. This wisdom of the crowd, which is available for free, means the end of many, expensive research sites.
  • Multi-sided business models
    Due to the diverse market, it is increasingly difficult to find the right partner. For this reason, business models will evolve that specialize in the mediation between producers, their suppliers and customers. Proven, close cooperation’s will dissolve in favor of spontaneous, time-limited projects that are needs-oriented. The mediator role can be exercised by all those, who can bring together the relevant partners and will be able to earn a living from it.
  • Site loss
    The classic location and headquarters will disappear. The company headquarters will be located where the founder is currently living without being officially registered, because the business takes place in cyberspace (see above). Accordingly, there will no longer be the workforce with their representatives and regulated employment relationships. Legislation, state power and jurisdiction need to be adapted to international challenges in order to prevent location nomads, who are constantly on the run from responsibility and other duties.

The point in time, when the digital transformation is over, depends on how quickly and skillfully large companies can respond to these new developments. At the same time, government agencies are challenged to create the appropriate framework conditions to support these new developments. It is not the question whether, but when the parties act. In the meantime, the pioneers of these developments will find their way in the Internet and implement their business models.

Bottom line: The digital transformation is happening for years. Like the frog in the Boiling Frog Syndrome, the world is heating up due to increasing digitalization and networking. The dimensions are the scaling for all, the limitless collaboration, the increasing acceleration, the „soft“ capital, the homeless values, the network for everyone, the multi-sided business models and the loss of the site. For the sectors of the economy and the society this requires an immediate rethinking, in order to get the control over the used free space, so far unregulated by enterprises. This applies to tax havens as well as to the providers of illegal businesses in the Darknet. The dimensions of digital transformation are the basis.

(More here: OECD Digital Economy Outlook 2017)

What really comprises digitization

Is digitizing old wine in new hoses, or is there more behind it? After IT managers have been trying to be better integrated into the business for years, they continue only to be the supporters of the departments. Meanwhile, all areas are steeped in information technology. No process is free of IT support. Even if users still think that they can do everything by themselves with office tools such as MS Excel, MS Access, MS Word and MS PowerPoint, they have to face the fact that professional data management, analysis and workflow systems form the basis for their competitive advantage. And again, an attempt is made to convince the business through the marketing of an appropriate slogan – i.e. digitization.

Not only the IT departments, but also the hosts of IT consultants are interested in the acceptance. Let’s take a closer look at the aspects which drive nowadays digitization.

  • Nothing works without network
    Digitalization lives on constant broadband access to the Internet. More or less half of humanity is on the net. In Germany, network availability is about 98% in the city, but only 36% in the countryside. As long as the society does not care about a balanced availability, the areas, which have no net, are excluded from any participation of the new possibilities. The network is the basis that enables digitization today.
  • Ubiquitous data
    The business processes generate data that describes more and more details in the course of value creation. According to IDC, the data volume is expected to increase to 40 zettabytes by 2020 (40,000,000,000,000,000,000,000 bytes). The data carries the digital content of the business. The handling of this flood of data will be the decisive competence of the future for users.
  • Barrier-free programs
    IT applications are located in the cloud in a digitized world. Access is available across all types of devices: mainframes, PC’s, notebooks, laptops, tablets, smartphones, PDA’s, RFID readers. 90% of German households have a computer (two-thirds use Outlook as an e-mail program). New models of collaboration will be possible, when access barriers, such as network availability, data protection and the use of the wide range of end devices, are simplified so that the programs receive, process and provide the necessary data in every imaginable environment.
  • Standardized procedure
    In order to be able to connect the processes spontaneously, they need agreements that ensure that the contact can be quickly established and resolved. Access is cable-based and wireless via WLAN or LTE/4G. As soon as this becomes possible outside the high-security wings of the companies, the operation of the business becomes independent from the traditional offices.
  • Digital culture
    In the digital world, businesses take place at unusual speeds and durations. For this purpose, also the employees must be able to quickly change from one idea to another. On the one hand, they must be ready to try new things spontaneously, to evaluate the results, but also to quickly let go unfavorable solutions. In order to be agile, work and responsibility have to be reorganized. A digital culture is closely related to a learning organization. This becomes apparent, when no negative consequences arise for the actors in the case of failure.

Bottom line: Digitization is a new attempt of penetrating the working world with information technology. Nothing really new happens. Long-known technologies are now so powerful that they can finally fulfill the promises of the last 20 years. The elements are now seamlessly interlinked – as long as the right basic conditions have been created. The net is as important to it as breathing in the air to people. The data are the blood cells that carry the oxygen to the place, where it is needed. The programs form the organs that process the oxygen for the survival of the whole organism. For this purpose, over time procedures have been developed to ensure operations. If the organism then also has an attitude that allows all participants lifelong learning, nothing impedes a digital culture. The above points show the essential requirements that really comprise digitization.